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Algae companies ask EPA to be able to cash in on power plant emissions

Amanda Peterka, E&E reporter

Greenwire: Wednesday, August 6, 2014

Algae companies on the cusp of commercialization say they worry that U.S. EPA may be shutting the door on an opportunity for them to cash in on power plants' carbon emissions.

Algae companies need to feed their microorganisms a steady diet of carbon dioxide, but EPA has not formally recognized their technologies in its proposals to stem greenhouse gas emissions from new and existing power plants. The companies worry that without government endorsement, power plants would have little incentive to give away their carbon for reuse.

Over the last few weeks, the industry has pressed EPA and White House officials to allow power plants to use carbon capture and utilization, or CCU, technologies to reduce emissions of carbon dioxide.

Without CCU, EPA's regulations could end up having a "profoundly chilling effect" on the algae industry, said Sapphire Energy Inc., the operator of the nation's first large-scale open-pond algae farm.

"The opportunity is taking what most may consider a waste product and reusing the carbon to make valuable products and commodities like fuel, chemicals and food," said Alice Martinez, a spokeswoman for Sapphire Energy.

Instead of reuse, EPA has put most of the emphasis so far on carbon capture and sequestration, a process by which carbon would be permanently stored in the ground. It has proposed to require that all new coal-fired power plants use CCS and has proposed listing CCS as an approved strategy in its rule for existing power plants.

Critics of EPA's proposed regulations have questioned those decisions, arguing that long-term underground storage is still technically infeasible and prohibitively costly, and faces strong competition from natural gas and renewable energy.

Algae companies say that their technologies are ready for prime time after years of researching and building small-scale test projects. Their technologies vary but generally convert carbon dioxide and sunlight into oil that can be refined into a host of nutritional products, cosmetics, fuel and other goods.

Several producers are banking on the boost that EPA acceptance of CCU in its greenhouse gas regulations could provide.

"We're in a position where these regulations are going to drive investment in biomass as a solution or potentially shut the industry down," said Matt Carr, executive director of the Algae Biomass Organization.

In Florida, algae company Algenol has always planned to take carbon dioxide from power plants to feed its algae and produce fuel to power cars and planes.

Algenol is in the midst of finalizing an initial deal with a utility to capture flue gas and feed it directly to its algae, but CEO Paul Woods said that the company is stymied somewhat by a lack of regulatory certainty that EPA recognition of carbon capture and reuse would provide.

"Utility companies are not in the business of being the first take on huge risks. That's outside of the definition of how they run their businesses," Woods said. "So I think it's exceptionally important that policy lead here."

The other large algae-to-fuel company, Sapphire, has four facilities in California and New Mexico. Its largest operation in New Mexico contains 100 wet acres of algae ponds, along with all the equipment necessary to harvest algae, extract "green crude" from the microorganisms and recycle water.

The omission of reuse technologies "creates an unnecessary barrier" to scaling up the operations, Martinez said. According to Sapphire, the amount of algae it takes to produce 1 gallon of green crude consumes 29 to 33 pounds of carbon dioxide.

Both Algenol and Sapphire are aiming to produce transportation fuel in large quantities. Carbon capture and utilization by power plants is less important for smaller operations that are producing a variety of products, such as nutritionals and oils for cosmetics, said Cellana Inc. CEO Martin Sabarsky.

At a demonstration facility in Hawaii, Cellana is currently feeding its algae, which live in open ponds, a combination of pure bottled carbon dioxide and flue gas from diesel generators. But carbon dioxide from power plants could potentially make the operation more economical in the future, he said.

"Right now, we're not dependent on it, but we really do see it as an important alignment of government policy with investment and innovation," Sabarsky said.

Another smaller company, BioProcess Algae LLC, which operates an algae facility co-located with an ethanol plant in Iowa, plans to one day also draw its carbon dioxide from utilities to produce animal feed and other products. CEO Tim Burns said that utilities have toured the operation and expressed interest.

"It's economics," Burns said. "Sequestration and putting it underground is expensive, and the ratepayers are not going to accept their bills being 50 to 75 percent higher because of capture and sequestration. The only profitable way to capture carbon right now is utilization, to grow something with it."

The algae companies and Algae Biomass Organization pushed their message in Washington, D.C., last week as EPA held several hearings on the existing power plant proposal. Algae officials also focused on the issue last week at an annual Department of Energy biomass conference.

Woods of Algenol said he met with White House senior adviser John Podesta and Special Assistant to the President for Energy and Climate Change Dan Utech two weeks ago and that the pair was "very receptive" to including more flexibility in EPA's proposals to allow for CCU.

In its proposed greenhouse gas rules for existing plants, EPA also listed fuel switching, using expanded amounts of less-carbon-intensive natural gas generation and heat rate improvements as means for power plants to reduce their emissions.

EPA has acknowledged that new technologies may become available for capturing carbon, but it says that those technologies must result in permanent storage of carbon. Algae producers said they're not sure where that leaves them, given that carbon dioxide may be released into the air when products are burned or used.

Sabarsky of Cellana said that algae companies at the very least should get partial credit for using carbon from power plants.

"I think we're open to discussion as to whether that should be 50 percent or some other number," he said. "But zero's the wrong number."